MORTGAGE AGREEMENT

Exhibit 10.11

 

VOLUSIA OPERATIONS, LLC (the “Mortgagor”)

to

NORTH SOUND LEGACY INTERNATIONAL, LTD

NORTH SOUND LEGACY INSTITUTIONAL FUND LLC

VICIS CAPITAL MASTER FUND, L.P.

C.E. UNTERBERG, TOWBIN CAPITAL PARTNERS I, L.P.

BASSO FUND LTD

BASSO MULTI-STRATEGY HOLDING FUND LTD.

ROCKMORE INVESTMENT MASTER FUND LTD.

TRELLUS PARTNERS, LP

TRELLUS PARTNERS II, LP

TRELLUS OFFSHORE FUND LIMITED

TRELLUS SMALL CAP OPPORTUNITY FUND, LP

TRELLUS SMALL CAP OPPORTUNITY OFFSHORE FUND LIMITED

IROQUOIS MASTER FUND LTD

(collectively, the “Mortgagee”)

MORTGAGE AGREEMENT

MORTGAGE AGREEMENT

 

THIS MORTGAGE AGREEMENT (“Mortgage”) is made on September 27, 2007, between VOLUSIA OPERATIONS, LLC, with an address of 7575 West Winds Boulevard, Suite D, Concord, North Carolina 28027 (the “Mortgagor”) and NORTH SOUND LEGACY INTERNATIONAL, LTD, NORTH SOUND LEGACY INSTITUTIONAL FUND LLC, VICIS CAPITAL MASTER FUND, L.P., C.E. UNTERBERG, TOWBIN CAPITAL PARTNERS I, L.P., BASSO FUND LTD, BASSO MULTI-STRATEGY HOLDING FUND LTD., ROCKMORE INVESTMENT MASTER FUND LTD., TRELLUS PARTNERS, LP, TRELLUS PARTNERS II, LP, TRELLUS OFFSHORE FUND LIMITED, TRELLUS SMALL CAP OPPORTUNITY FUND, LP, TRELLUS SMALL CAP OPPORTUNITY OFFSHORE FUND LIMITED, and IROQUOIS MASTER FUND LTD, with an address of c/o Burnham Hill Partners, 590 Madison Avenue, 5 ^th Floor, New York, NY 10022 (collectively, the “Mortgagee”).

 

WHEREAS, Mortgagor has borrowed certain funds from the Mortgagee pursuant to the Note Purchase Agreement dated as of the date hereof (the “Note Purchase Agreement”; capitalized terms used herein and not defined herein have the meanings set forth in the Note Purchase Agreement) as evidenced by the Notes in the aggregate principal sum of up to FIFTEEN MILLION DOLLARS ($15,000,000) (collectively, the “Loan”) upon such terms and conditions as therein provided;

 

WHEREAS, Mortgagor and Mortgagee agree and acknowledge that the total value of the Mortgaged Property (as hereinafter defined) is equal to THREE MILLION DOLLARS ($3,000,000) and that the amount secured by this Mortgage is hereby limited to said amount.

 

The Mortgagor has agreed to enter into this mortgage (the “Mortgage”) to grant to Mortgagee a mortgage lien on and security interest in and to the Mortgaged Property (as hereinafter defined) as security for the payment and performance of all Obligations (as hereinafter defined) of the Mortgagor to the Mortgagee hereunder and under the Note Purchase Agreement, the Notes and the other Transaction Documents (collectively, the “Loan Documents”), and intending to be legally bound, Mortgagor does hereby grant, sell, bargain, mortgage, assign, transfer, pledge and convey to the Mortgagee, and does hereby grant a security interest (the “Security Interest”) to the Mortgagee in Mortgagor's right, title, and interest in and to the following described property, whether now owned or hereafter acquired (collectively, the “Mortgaged Property”):

 

b.           all improvements, material, property rights and interests including but not limited to:

 

i.           all buildings and other improvements now or hereafter located on the Mortgaged Property (the “Improvements”);

 

ii.           all streets, lanes, alleys, passages, ways, water courses, easements and appurtenances whatsoever thereunto belonging in or in any way made appurtenant hereafter, and the reversions and remainder, with respect thereto;

 

v.           all awards or payments, including interest thereon, which may be made with respect to the Mortgaged Property, whether from the exercise of the right of eminent domain (including any transfer made in lieu of the exercise of said right), or for any other injury to or decrease in the value of the Mortgaged Property, including without limitation, all awards or payments of estimated compensation, all damages to the Premises or Improvements resulting from any taking, all machinery and equipment dislocation  expenses, all settlement amounts and apportionment of taxes;

 

vi.           all insurance policies covering the Mortgaged Property and all proceeds of any unearned premiums on any such insurance policies including, without limitation, the right to receive and apply the proceeds of any insurance judgments, or settlements made in lieu thereof, for damage to the Mortgaged Property;

 

vii.           all future leases and other agreements affecting the use and occupancy of the Mortgaged Property now or hereafter entered into, and all licenses, permits and agreements with or from all boards, public utilities, agencies, departments, governmental or otherwise, relating to or affecting the Mortgaged Property or the use and occupancy thereof, whether heretofore or hereafter issued or executed;

 

TO HAVE AND TO HOLD all of the Mortgaged Property unto Mortgagee and its successors and assigns, forever, upon the terms and conditions herein set forth.

 

AND IT IS AGREED AND UNDERSTOOD that until an Event of Default, (as such term is defined herein), shall have occurred and the Required Mortgagees (as hereinafter defined) have elected to foreclose as detailed herein, Mortgagor may retain possession of the Mortgaged Property.

 

COVENANTS, REPRESENTATIONS AND WARRANTIES

 

IT IS HEREBY COVENANTED by the parties hereto that the Mortgaged Property is to be held and applied subject to the further terms herein set forth; and Mortgagor, for itself and its successors and assigns, hereby covenants, agrees, represents and warrants with and to Mortgagee as follows:

 

 

1.            Title to Mortgaged Property .  Mortgagor represents, warrants, covenants and agrees Mortgagor shall at all times remain the legal and beneficial owner of good and marketable indefeasible title in fee simple absolute to all of the Mortgaged Property.; Mortgagor has full power and authority to grant the Mortgaged Property as provided in this Mortgage and will forever warrant and defend its grant made herein against any and all claims and demands whatsoever, except as specifically provided in this Mortgage.

 

2.            Definition of Obligations .  This Mortgage secures the payment and performance of the following indebtedness, liabilities and obligations (collectively referred to herein as the “Obligations”):

 

a.           the Obligations of the Mortgagor set forth in the Note Purchase Agreement, the Notes and the other Transaction Documents; and

 

b.           all other sums due or to become due under the Notes and this Mortgage including all extensions, renewals, modifications or reamortizations of the debt evidenced by the Notes, all increases or additions to such debt, and all other debts, obligations and liabilities of every kind and character of  Mortgagor now or hereafter existing in favor of Mortgagee whether such debts, obligations or liabilities be direct or indirect, primary or secondary, joint or several, fixed or contingent, and whether originally payable to Mortgagee or to a third party and subsequently acquired by Mortgagee.

 

3.            Responsibility and Preservation of Mortgaged Property; Compliance with Laws.   Mortgagor assumes all liability and responsibility in connection with all Mortgaged Property acquired by Mortgagor and the obligation of Mortgagor to pay all Obligations shall in no way be affected or diminished by reason of the fact that any such Mortgaged Property may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable to Mortgagor.  Mortgagor shall keep the Mortgaged Property protected and in good order, condition and repair at all times and shall not: (a) commit, permit or suffer any waste, damage, disfigurement or injury to or upon the Mortgaged Property or any portion thereof; or (b) demolish, destroy, or remove any buildings, fixtures, structures or improvements thereafter erected on or annexed or affixed to the Mortgaged Property.   Mortgagor further agrees and covenants to comply with and perform at its own expense any and all present or future, ordinary or extraordinary, foreseen or unforeseen laws, regulations, ordinances or requirements concerning the Mortgaged Property or any portion thereof, or the use thereof, or the streets adjacent thereto, of the federal, state or municipal governments, or of any departments, subdivisions, bureaus or offices thereof, or of any governmental, public or quasi-public authorities now created or hereafter created or of the National Board of Fire Underwriters, any local Board of Fire Underwriters, or other body having similar functions, or of any liability, fire or other insurance company having policies outstanding with respect to the Mortgaged Property or any part thereof (including, without limitation, all laws, regulations, ordinances and requirements relating to environmental issues and hazardous substances) (said laws, regulations, ordinances and requirements hereafter collectively referred to as the “Laws”).

 

4.            Taxes .  Mortgagor shall pay, before the same becomes delinquent, all taxes, assessments and charges of every nature (collectively, “Taxes”) and by whomever assessed that may now or hereafter be levied or assessed against, or that by reason of nonpayment may become a lien upon, the Mortgaged Property, or any part thereof, and, if requested by Mortgagee, Mortgagor shall, prior to the date each Tax would become delinquent by reason of nonpayment, submit to Mortgagee official Tax payment receipts or other evidence acceptable to Mortgagee of the due and punctual payment thereof.  Mortgagor shall not claim on demand or be entitled to any credit on account of the Obligations for any part of the taxes paid with respect to the Mortgaged Property or any part thereof and no deduction shall otherwise be made or claimed from the taxable value of the Mortgaged Property, or any part thereof, by reason of this Mortgage.

 

5.            Insurance .  In the event Mortgager shall improve the Mortgaged Property thereby constructing buildings or other improvements thereon, then Mortgagor shall carry adequate insurance against all liability and hazards, including without limitation, fire and casualty insurance for the mortgaged property as are usually carried by entities engage in the same or a similar business situated as Mortgagor.  In the event of a casualty loss, Mortgagor shall utilize the insurance proceeds to rebuild the premises or apply the proceeds to the outstanding mortgaged sums due pursuant to the terms of this mortgage to satisfy any outstanding indebtedness hereunder.  The aforesaid liability insurance shall be in an amount satisfactory to Mortgagee and shall name Mortgagee as an additional insured.

 

6.            Tenant’s Compliance with Laws .  Mortgagor shall cause all future tenants, if any, under any leases to comply, with all Laws affecting the Mortgaged Property.

 

7.            Right to Inspect and Cure .  The Mortgagee shall, upon reasonable advance written notice to Mortgagor, have the right to conduct or have conducted by its agents or contractors, such inspections as the Mortgagee shall deem necessary or advisable from time to time.

 

8.            Estoppel Certificate .                                                      Mortgagor will certify, by a writing duly acknowledged, to Mortgagee or to any proposed assignee of this Mortgage, the amount of principal and interest then owing on the Obligations and whether, to Mortgagor's best knowledge, any offsets or defenses exist against the Obligations, within five (5) days after a request therefor is received by Mortgagor.

 

9.            Prohibition on Transfers .  Mortgagor shall not at any time (i) sell, assign, transfer, convey, lease with option of sale, or dispose of all or any part of or interest in the Mortgaged Property, or (ii) suffer or permit transfer by operation of law of the Mortgaged Property, or any part thereof or interest therein, without the prior written consent thereto of Mortgagee unless the then remaining balance due under this Mortgage and Notes is satisfied.  In the event that the ownership of the Mortgaged Property or any portion thereof becomes vested in a person other than Mortgagor, Mortgagee may, without notice to Mortgagor, deal with such successor or successors in interest with reference to this Mortgage, and the indebtedness hereby secured, in the same manner as with Mortgagor, without in any way vitiating or discharging Mortgagor's liability hereunder or upon the indebtedness hereby secured.  No sale of the Mortgaged Property shall operate to release, discharge, modify, change or affect the original liability of Mortgagor herein, either in whole or in part.  Any violation of the foregoing limitations shall be deemed an Event of Default hereunder.

 

10.            Reports and Notices .  Mortgagor will furnish Mortgagee with copies of reports and notices pertaining to the Mortgaged Property or any portion thereof, its value or its operations, and which are submitted by Mortgagor to, or received by Mortgagor from, any legally constituted authority having jurisdiction of operations conducted on the Mortgaged Property, including, but without limitation, any licensing agency, or which deal with any imposition, condemnation of all or any portion of the Mortgaged Property or default under any mortgage or security agreement encumbering the Mortgaged Property or any portion thereof.

 

11.            Further Assurances .  Mortgagor will execute, acknowledge and deliver, at Mortgagor's own cost and expense, all such further acts, deeds, conveyances, assignments, notices of assignment, transfers and assurances as Mortgagee shall form time to time reasonably require for the better granting, bargaining, selling, assigning and conveying to Mortgagee of the Mortgaged Property.

 

12.            Authorization to Make Payments .  Mortgagor hereby authorizes Mortgagee or its designee:

 

a.           To pay all taxes or other governmental charges, with all interest costs and charges accruing thereon, which may at any time be or become a lien on the Mortgaged Property, or any portion thereof;

 

b.           To effect any insurance required hereunder and to pay the premiums thereon; provided, however, that none of the above provisions shall be construed as obligatory upon Mortgagee or as making it liable for loss, damage or injury which may result from the non-insurance of the Mortgaged Property, or any portion thereof, or other failure;

 

c.           To incur or pay any claim, lien, encumbrance or other expense in protecting its rights hereunder and the security hereby granted;

 

d.           To do such things as may, in the judgment of Mortgagee, be necessary or advisable in order to perform and observe any present agreement affecting or restricting the use of, or pertaining to, the Mortgaged Property, or any portion thereof, including, without limitation, the making of such repairs and the taking of such steps as Mortgagee deems reasonably necessary to prevent or cure waste and the payment of any reasonable sums and the incurring of reasonable expenses, including attorneys' fees; and

 

e.           To appear or participate in any action or proceeding purporting to affect the security hereof, it being understood that Mortgagee shall have no obligation, expressed or implied, to advance any funds, incur any expense or liability, or take any action authorized by this provision or any other provision of this Mortgage.

 

13.            Definition of Event of Default .  The occurrence of any one or more of the following events shall constitute an Event of Default hereunder:

 

a.           The failure of Mortgagor to make any payments required under the Notes or this Mortgage; or

 

b.           Mortgagor shall fail to perform or observe any other term, covenant, warranty, obligation, provision, representation, or agreement contained in this Mortgage or any other Obligation;

 

c.           Any representation, statement, or warranty made in this Mortgage shall prove to have been false or incorrect in any material respect when made;

 

d.           Mortgagor shall transfer all or a part of the Mortgaged Property in violation of this Mortgage;

 

e.           The holder of any lien shall commence foreclosure proceedings against the Mortgaged Property or any part thereof;

 

f.           Mortgagor shall be insolvent, or shall file a voluntary petition in bankruptcy or a voluntary petition seeking to effect a plan or other arrangement with creditors;

 

 

g.           Mortgagor shall be adjudicated bankrupt, or shall make an assignment for the benefit of creditors, or shall apply for or consent to the appointment of any receiver or trustee